House price growth slows in March quarter

House price growth slowed in the March quarter after thriving in 2013.

All the capitals still recorded some ­capital gains in the three months to March, except Canberra, where sentiment has suffered since talk of public service cuts began around last year’s ­September election.

The total value of the country’s housing stock rose beyond $5.1 trillion in the March quarter, up $105.3 million, according to ABS figures released on Tuesday.

Sydney’s market has been the strongest performer for the past year and that trend continued with a 2.3 per cent price rise in Q1. Melbourne prices were up 2.1 per cent and rises just over 1 per cent were recorded in Perth, Hobart and Darwin.

ABS home lending figures, also released on Tuesday, showed loan approvals were up 11 per cent in the 2014 first quarter compared to the same time last year. Month-on-month however, approvals fell 1.1 per cent in March, seasonally adjusted.

“By setting a rate-hold mentality, home owners and buyers will remain confident knowing their repayments will stay low and they’re saving money in interest charges," Mr De Martino said.

The March quarter recorded the most growth in lending since 2002, stemming from record-low interest rates and strong property sales, he said. “The cash rate has only dropped 50 basis points over the past year and we’re seeing 11 per cent quarter-on-quarter growth for home loans.

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“While the low cash rate is the primary driver, the lack of rate movements hasn’t slowed down growth."

Lending was highest in NSW and Queensland, up 15 per cent, followed by South Australia and Western Australia, both up 15 per cent. Owner-occupier commitments were down 0.1 per cent in trend terms, the first fall since May 2012. Real Estate Institute of Australia president
Peter Bushby
said that showed a stabilising market. Lending to first-home ­buyers rose marginally in March, ac­counting for 12.6 per cent of loans, up 0.1 per cent on February.

Housing Industry Association economist
Diwa Hopkins
said lending for new home building had risen in the March quarter. “Following a period of fairly strong increases late last year, prices appear to be growing within a more sustainable range," she said.

Consistent population growth and a lag in new dwelling construction meant housing demands were still well ahead of supply, Ms Hopkins said.

“Combined with the current low interest rate environment, these developments provide favourable conditions for the residential construction sector."

Master Builders Australia was still confident in residential building activity but chief economist
Peter Jones
said the dip in March figures, compared to February, showed the market was still sensitive to any shifts in home-buyer confidence.